Chart of the Week - US Dollar Index vs Gold

A comment on CNBC recently where the commentator mentioned
one of the accepted axioms of the gold market – that gold is “inversely correlated
with the U.S. dollar index,” has prompted this Chart of the Week.  We thought we would share a long term chart
of gold and the U.S. Dollar Index.  The
chart pretty well speaks for itself. 

Sometimes axioms need to be questioned rather than accepted
at face value.  (Chart no log scale intentionally.)      

When commentators speak in terms of the dollar index and its relationship to gold, tune them out.  But when they speak of the  “gold/dollar exhange rate,” or the “gold/euro or gold/yen exchange rate,” listen up.  Odds are those people know of what they speak.   

The U.S. Dollar Index ($USD or DXY) is merely a measure of one sick fiat currency, the greenback, versus a basket of other members of the same fiat currency leper colony.  Any relationship to gold of the DXY is coincidental. 

Gold is the measure of the purchasing power of all fiat currencies over time.